Introduction
Will the downward momentum that has affected Solana (SOL), the strong competitor of Ethereum (ETH), the leading smart contract platform, continue? After reaching its annual high of $32.13 on July 14, the price of the token has dropped. The conflicting views in the weekly and daily time frames of Solana can make it difficult to determine the direction of the trend. According to experts, the current weekly trend in the cryptocurrency is upward, while the short-term trend is downward.
Critical Price Movements in Solana
The analysis of the price movement on the weekly chart of SOL may reveal a significant breakout from a resistance line that has been active for over 600 days. Such breakouts often indicate the end of the previous trend and the beginning of a new upward trend. This situation may indicate that SOL has initiated a reversal of the upward price trend and may gradually rise towards its previous high levels. However, SOL encountered a strong resistance at the $27 level, resulting in a long upper wick formation indicating selling pressure. As a result, the price has been falling for several weeks in a row and is trading below the $27 region.
Analysts usually refer to the relative strength index (RSI) on the weekly time frame to confirm the breakout. RSI is a metric used to assess market momentum and determine potential overbought or oversold conditions. As of the current position, RSI has shown a higher bottom and is positioned above 50. A close above 50 last week may indicate the first occurrence of this since the end of 2021. However, for a confirmed reversal of the upward trend, it may be crucial for the SOL price to convincingly break out of the horizontal range at $27.
The Future of Solana Price
In addition, to sustain the legitimacy of the breakout, RSI may need to be kept above the 50 line. While the weekly time frame indicates an upward trend in technical analysis, the daily trend shows signs of a downward trend, creating uncertainty between different time frames. The main reasons for the decline are divergence and a drop below the $27 resistance area. This is considered a bearish sign and can often lead to a significant decline.
Following the divergence, SOL dropped to $22.48 and is currently trading near this level. The daily RSI also indicates a downward trend as it has fallen in the past two weeks and dropped below 50. Movements below this line are considered signs of a downward trend. If the decline continues, it could retrace to an ascending support line currently at $17. This represents a 27% decrease from the current price.
Conclusion
In conclusion, Solana’s price movements have been conflicting, with the weekly chart indicating an upward trend and the daily chart suggesting a downward trend. The breakout from the resistance line on the weekly chart may indicate a potential reversal of the upward price trend, but it’s essential for the price to convincingly break out of the $27 horizontal range for confirmation. Traders and investors should closely monitor the RSI and price movements to assess the direction of Solana’s future prospects.
Disclaimer
This article is for informational purposes only and should not be considered as financial advice. Trading cryptocurrencies involves risk, and readers are encouraged to conduct their own research and consult with financial advisors before making any investment decisions.
